"Financial Sector vs Big Tech Conflict, 'Same Business Same Regulation' as the Solution" (Comprehensive)

Big Tech's Full-Scale Entry into Finance: Tilted Playing Field vs. Consumer Benefits Clash
Conflict Peaks Over Debt Refinancing Platform Disputes
Expert Urgent Diagnosis: "Government Must Act as an Impartial Referee"

[Asia Economy Reporters Jin-ho Kim and Ki-ho Sung] As the digital finance era fully unfolds, traditional financial institutions and big tech companies (large information and communication enterprises) are clashing over various issues. This is because each party has sharply conflicting interests regarding the new systems introduced in response to these changes. While the financial sector claims that big tech companies receive excessive privileges, big tech argues that excessive restrictions from the financial sector infringe on consumer convenience.

Despite mediation efforts by financial authorities, the confrontation between the two sides continues. Experts point out that the government should actively respond with the principle of ‘same business, same regulation’ while leaving the market to operate autonomously.

◆ Tilted playing field vs. consumer benefits ‘tension’ = According to the financial sector on the 19th, the conflict between existing financial companies and big tech is deepening ahead of the scheduled launch of the non-face-to-face refinancing loan (loan switching) platform in October. The refinancing loan service promoted by the government allows consumers to compare interest rates of all financial institutions’ loan products via smartphone applications or websites and easily switch to loans with lower interest rates. Both financial companies and big tech agree with this purpose.

However, financial companies strongly oppose, arguing that it will only increase big tech’s dominance. They claim that consumers will have no choice but to use services from big tech or fintech companies that have built powerful platforms. On the other hand, big tech cites consumer benefits and raises concerns about high intermediary fees.

The two sides have also sharply clashed over the implementation of MyData, which has been promoted since last year. From the preparation stage, there were disputes over the scope of data usage, and recently, they have been clashing over the timing of the project’s implementation. The Financial Services Commission recently held an expert advisory meeting and decided to include bank transaction details within the scope of MyData. Transaction details refer to information recorded about bank account deposit and withdrawal transactions, including the accounts, names, and memos of senders and recipients. Banks have opposed disclosing this information, citing concerns about misuse of personal data. When financial authorities indicated that the mandatory implementation of the MyData application programming interface (API) might be delayed from August, accommodating big tech’s demands, opposition from the financial sector intensified.

The conflict over the amendment to the Electronic Financial Transactions Act is also ongoing. The financial sector argues that big tech companies effectively engage in deposit and loan businesses but are not subject to the same regulations as banks. Big tech counters that since they cannot freely operate consumer deposits, cooperative payment businesses are clearly different from deposit and loan businesses.

The tug-of-war with big tech is not limited to banks. Previously, the card industry had a standoff with financial authorities over the ‘Payco small amount postpaid payment limit.’ Initially, the limit was expected to be around 500,000 KRW, but reflecting the card industry’s position, it was reduced to 300,000 KRW. However, this effectively allowed credit sales, and the card industry views the encroachment of big tech companies into the credit sales market as a matter of time.

◆ Experts: "Government should be a third party, not a player" = Experts explain that it is natural for the two sides to clash as the digital finance era unfolds. However, they emphasize that the government’s active role is crucial before confusion worsens. In particular, experts agree on the necessity of applying the same regulations to the same industries.

Professor Min-hwan Lee of Inha University’s Department of Global Finance said, “With the emergence of big tech, the boundaries of the financial industry have become ambiguous, so instead of overall regulations on the financial industry, regulations should be introduced by business type.” He added, “Creating regulations by business type prevents conflicts among stakeholders.” He pointed out that although the pace of recent changes in the financial industry is very fast, the framework for regulation and supervision needs to be transformed.

Professor Lee also noted, “Considering the strong power of platforms, banks’ concerns should be somewhat taken into account,” adding, “Ultimately, if platform companies dominate the market, banks will lose customers, and consumers will also suffer.”

It was also emphasized that the government should act as a ‘referee’ by leaving financial policy to market autonomy while applying regulations without discrimination, rather than directly intervening. Professor Ji-yong Seo of Sangmyung University’s Department of Business Administration said, “The government should be a third party that reviews regulations. It should not participate as a player as it does now,” and added, “For the refinancing loan platform, it would be better to create platforms by industry to promote competition and resolve conflicts.”

He further stated, “If competition is promoted in the private sector, innovative products will emerge and higher-quality services will be possible. It should not be government-led. While the intention to promote innovation through big tech is understood, it must be recognized that regulatory blind spots may arise.”

There was a unanimous voice on the principle of applying the same regulations to the same business. Professor Sang-bong Kim of Hansung University’s Department of Economics said, “Globally, finance is an industry with lines that must be strictly observed,” and emphasized, “The same regulations are necessary for the same business.” Senior Research Fellow Hye-kyung Cho of the Political Economy Research Institute Da-an also said, “The principle of same function, same regulation must be established,” adding, “The controversy continues because the principle is not being followed.”

This content was produced with the assistance of AI translation services.